Nov
11

Trading Whipsaw

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I think today has a good chance of being a whipsaw day and I am being very careful. As I mentioned in my early morning post, today’s open was going to take out a lot of stops. It was an obvious resistance level and once all the stops are knocked around I suspect there may not be buying to keep things going.

The $USDUPX is flat today and the declining Dollar is not there to support the market right now.

I took a chance and let my stops get taken out on my short hedges early to try to get ahead of the push higher as more stops got taken out. This left me long and so I also took profits on my XLE long and added PZZA short.

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Notice $TICK isn’t showing a lot of overly bullish periods today. In fact, the big jolts are down ticks. On a bullish day, I’m looking to see upward thrusts not downward thrusts. To me, this seems more consistent with my theory of stops getting hit than buying activity.

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  • I think about it this way. If oil is at 80 dollars a barrel without hurricanes, demand and Iran problems, then what will it be like when something actually goes wrong? The dollar may be supporting oil, but what happens when there are actually some issues?

    People are still getting killed in Iraq. Iran is still developing nukes. Who knows when the next problem will strike? You know it will strike. What happens when demand picks up?
  • What happens if demand goes down? But I understand your point of view and long term the dollar has been in decline for a long time and it is likely this trend continues and that oil continues to go higher. But oil is consolidating right here and I don't like owning it with the dollar so close to support in the short term.
  • I think we hit the pivot on the $INDU.
  • Support on the Dollar is approaching and will halt things at least for a consolidation. I'm more into trying to figure out whether the Dollar's 2008 will be taken out and whether there is another leg to this government bubble/quantitative easing bubble.

    People are calling this a tough market and irrational and blame GS this and that. The truth is, this market was a gift. If you could identify the government bubble trend and jump on the train, what is easier than just letting it ride?

    I mentioned this morning there were two big trends in 2009 (in my opinion). 2009 is pretty much done. I'm now trying to figure out 2010.
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